Stock Average Calculator, Trading Tools for Averaging Down Strategy
If you’re a long-term investor, chances are that you’ll want to consider making good use of the averaging down strategy. This is an investment strategy that involves acquiring extra amounts of stocks that are declining.
The idea is to bring down the average cost of the asset such that if the stock rebounds, you can get optimal returns from it.
To help you determine if this is the right strategy for you, we have provided an average down stock calculator that you can use.
Average Down Calculator
Simple tool for stock traders and investors.
Bump Up Your Stock Trading Strategy Now
If you’d like to bump up your trading strategy, we’d recommend making use of a tried and tested stock screener. We do highly recommend Trade Ideas.
This is a tool we have been tracking since 2016 and it has so far proven quite successful.
In fact, Trade Ideas has outperformed the S&P back-to-back since 2016. In 2019, it was awarded the “Best Machine Learning Development” award by Fund Technology and WSL.
Percentage Gain Calculator
If you’d like to determine the percentage with which your stock has gained or lost, here’s a simple calculator you can use.
Quick Points To Note
- As a strategy, averaging down involves spending extra amounts of cash in a stock that’s declining hoping that it will rebound and you’ll reap the benefits.
- This is an approach that’s often favored by long-term investors who prefer to use a contrarian mindset to investing (i.e. going against the prevailing trends).
- The method can be highly effective in case the stock rebounds as it can magnify the gains. However, the same is true should the stock continue to decline.
- As a general tip, averaging down seems to work best if and when used for blue-chip stocks with a long-term track record.
- It’s recommended to only average-down stocks from companies that have solid cash flows and minimal debt.
By and large, this is a highly useful approach to cost-effective wealth accumulation. Instead of viewing a declining stock as a red flag, you’ll choose to view it as “being sold at a discount”.
Some of the best stock traders in history were people who took risks when everyone else avoided such risks.
And by using this exact strategy, you’d be giving yourself a vantage point that has helped convert ordinary investors into big-time Wall Street tycoons.